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ACCC applauds Telstra breakup

TONY EASTLEY: The Federal Government's decision to effectively impose a breakup of the telecommunications giant Telstra has been welcomed in many quarters as historic and overdue.

The chairman of the competition watchdog, the ACCC Graeme Samuel believes that while consumers are the ultimate winners, it's unlikely that the interests of shareholders who've seen their shares plunge, will ever be aligned.

Mr Samuel is speaking with our business editor Peter Ryan.

PETER RYAN: Graeme Samuel, who are the big winners out of the proposed breakup of Telstra - consumers or shareholders?

GRAEME SAMUEL: Consumers quite clearly, there's 21 million Australian consumers, about 16 million of them are using some form of telecommunications service and they are the big winners because at long last we're seeing competition quite clearly infused into the telecommunication sector.

PETER RYAN: Telstra shareholders, especially those who bought in at $7.40 in the T2 float are facing some losses today, surely they're losers out of these proposed changes?

GRAEME SAMUEL: Well look I can't comment upon the position of shareholders. In terms of the public interest, that's what the ACCC is concerned with, the public interest is best served by having a truly competitive telecommunications sector.

Now this should have been the decision of governments back in 1992 when Telecom, now Telstra was formed. It should have been the decision of governments before the Telstra privatisation took place, because that's what national competition policy demanded - which was that the public monopoly as it then was, should not be converted into a private monopoly which is what occurred when the privatisation occurred.

And so what we're now seeing with yesterday's announcement is the correction of mistakes of previous governments going back as far as the early 1990s.

PETER RYAN: You say that both Labor and Coalition governments going back to 1992 have failed to bite the bullet on this, is this because they were taking short-term views on Telstra?

GRAEME SAMUEL: All I can say is that there was, as is now quite public, a debate that occured between then minister of communications Kim Beazley and the then treasurer Paul Keating as to the course that should have been followed.

And I understand that Paul Keating advocated a course along the lines of what is now being adopted by the current government.

PETER RYAN: Do you believe it's possible that in the medium to long term that shareholder and competition interests can be aligned?

GRAEME SAMUEL: I think ultimately that's the way that markets work in market economies. But you will never align shareholder interest with the public interest where shareholder interests are encroached or enshrouded in a concept of monopoly and monopoly prices and monopoly relationships.

PETER RYAN: The breakup has seemed inevitable for years, but could this have occurred while Sol Trujillo was running Telstra?

GRAEME SAMUEL: Look I don't want to get involved in that sort of a debate, I've avoided all debates with either Sol Trujillo or any of those at senior management level in the public arena, I don't think it's been appropriate.

TONY EASTLEY: The chairman of the ACCC, Graeme Samuel, speaking with our business editor Peter Ryan.